Although unlikely in the near future, it is conceivable that a merchant using digital currency, conducting 100% of his transactions locally or worldwide could have complete bookkeeping records of every transaction perfectly balanced for any on-demand audit at the push of a button. There would be no requirement of creating a paper trail or double entry of data; drastically improving efficiency. The transaction fees or chargebacks would be nearly zero. That is the future of money.
However, historically, large scale changes and mass acceptance of new technologies, despite their immense potential to improve efficiencies and productivity, have taken years, decades, or even many generations to become fully implemented. When widely adopted, these technologies led to massive job creation, improve standard of living, and enormous wealth accumulation.
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We have been down that route many times. Large scale changes and mass adoptions take years, decades or many generations as the case may be. The first Industrial Revolution took place during the 18th and 19th centuries. Recorded history witnessed the transition from predominantly agrarian rural societies to an industrial Europe and North America with urban societies over a time span of multi-generations. Many early adaptors made their fortune with the convenience of money as a medium of exchange, a store of value and a unit of account, while creating a massive number of new jobs. The utilization of steam engines and other machineries brought about immense productivity gain. Yet there had been great struggle in many cases where the full productivity improvement was only achieved after a new generation of managers replaced the older generation. Large scale changes are never quick or easy.
The second Industrial Revolution took place from 1850 to 1914 when automation and mass production kicked into high gear. Electricity and fossil fuel became the catalyst for the new invention of the combustion engine. Again it took decades for many new inventions to evolve and gain mass acceptance. New fortunes were made and millions more jobs were created. Productivity continued to improve.
Since the end of World War One, we have been in the Third Industrial Revolution. Within this period we have been witnessing many technology revolutions, causing impressive productivity gain as the result of great improvements in efficiency. Hundreds of millions of new jobs have been created and the standard of living drastically improved around the world, with enormous fortunes accumulated by a relatively small percentage of the population. According to a recent Oxfam published report, the richest 1% of the population controls nearly as much wealth as the remaining 99% combined.
Perhaps one of the most significant changes was the switch from analog to digital technology that started in the 1980s, at the emergence of personal computers and cellular telephones. We are now living in the digital age and almost anything that can be digitized will be digitized. Get use to the term digital asset which includes digital currency. We should learn to embrace it and objectively gain the knowledge not to fear it. When one begins to understand why digital currency and the Blockchain technology will be the greatest technology revolution since the internet, that fear will be replaced by a desire to learn more and put it to good use.
To a large extent most money or fiat currency is already digital, in the sense that it is recorded, stored, transmitted, accounted for, and posted in a digital ledger.
The banks seem to have finally caught up, as a necessity, in order to remain competitive while attempting to constantly improve productivity. Unfortunately, a closer examination of our current banking system, financial services, and the credit and debit card payment network system will reveal great inefficiencies and risk exposures.
With the exception of a cash payment between two parties, money transactions require multiple data entries to provide audit trails. It also requires extra time to pass through multiple intermediaries often incurring high fees especially in the case of merchant accounts accepting debit and credit cards, wire transfers, and cross border remittances.
As Bitcoin and other digital currencies gained broader acceptance, major banks are seriously considering their version of token or digital currency. It is too early to tell how this will play out. What is predictable is that many jobs will be on the line for the sake of better efficiency for higher productivity. The banking system will have their version of centralized digital currency to enable more efficient flow of funds and record keeping.
Bitcoin and other digital currencies like DNotes are much more than currencies that meet the full functions of money as a unit of account, as a store of value, and as a medium of exchange; the inherent characteristics of fiat currency. They are also a global payment network enabling one Internet user to pay another Internet user anywhere worldwide, instantly at nearly zero cost, without the oversight of any central authority or middlemen.
An integral part of digital currency is the highly innovative Blockchain distributed consensus and record keeping technology that eliminates the high cost of double entries and the complexity of audit trails. Every transaction is a cryptographically verified, time-stamped permanent record for anyone worldwide to see. By design, Bitcoin and digital currency is programmable money that allows additional data and instructions to be recorded on the Blockchain.
Although unlikely in the near future, it is conceivable that a merchant using digital currency, conducting 100% of his transactions locally or worldwide, could have complete bookkeeping records of every transaction perfectly balanced for any on-demand audit at the push of a button. Digital currency eliminates the costly, excessive paper trail with further savings coming from nearly zero transaction fees and no chargebacks. That is the future of money.